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Ecommerce fraud and online fraud prevention in Indonesia

An ecommerce market already attracting the attention of its neighbours, Indonesia is working to improve payment security. Online fraud prevention measures will be important to allay consumer concerns as the market grows.
While fraud data for Indonesia is limited, the country has been reported as having a poor fraud record. In 2012, Indonesia’s reputation for card fraud was cited as the reason why consumers preferred cash on delivery (in cities) or bank transfers to card payments. 70 % of online users were reported to be inhibited from making online purchases by both logistics and a fear of fraud.
In 2013, PWC reported that, while more than half the Indonesian population did not have access to a formal financial channel, fraud was becoming a growing concern as Internet banking and card transaction numbers increased. The report recognised a need for ‘specific anti-fraud controls and enhancements of risk controls and processes’.
The introduction of EMV was mandated by Bank Indonesia in 2011 - all banks are to use 6 digit PINs on credit cards by the end of 2014 and chip debit cards by the end of 2015.

Despite the lack of official statistics, the Indonesian ecommerce market is reportedly growing fast, fuelled both by small companies and those based in rural areas, and by the entrance of Chinese, Japanese and Korean merchants. 2014 figures from the central bank indicate that, on an average day, there are 420.000 e-payment transactions, with a value of USD 762.000.
According to the Indonesia Ecommerce Association, 2015 will be a ‘tipping point’ for ecommerce as mobile shopping and payments will account for between 35% - 40 % of the market.
As the market grows and opens up, the planned introduction of a national ID card, which will be used in ecommerce transactions, is expected to have a positive impact, improving trust and security. Strong online fraud prevention measures can also be expected to help allay consumer concerns, while further promoting ecommerce growth.
More information about ecommerce fraud, mobile fraud and online fraud prevention in Indonesia can be found in the Cross-border Ecommerce Report - Indonesia